According to a report by research firm Pike Research (Boulder, Colo., U.S.A.), the continued adoption of cloud computing will lead to a reduction of data center energy consumption of 31% from 2010 to 2020. The energy-efficiency benefits of cloud computing are substantial, says the research firm, and growth in the market will have important implications for both energy consumption and greenhouse gas (GHG) emissions.

According to Pike Research, the rapid spread of cloud computing has enabled enterprises to outsource many information technology capabilities, including and especially data centers, leading to savings on manpower, money, and energy.

"Cloud computing revenue will grow strongly over the next decade, with a CAGR of almost 29%," says senior analyst Eric Woods. "But the reduction in energy consumption will be even more significant. Massive investments in new data center technologies and computing clouds are leading to unprecedented efficiencies."

Cloud computing is less expensive to operate, consumes less energy, and has higher utilization rates than traditional data centers, says the research firm. As a result, the transition to the cloud will continue to accelerate, and much of the work done today in internal data centers will be outsourced to the cloud by the end of the decade.

Furthermore, it's important to note that the spread of cloud computing services is helping to create a virtuous circle, wherein suppliers of servers, network equipment, disk drives, and cooling and power equipment increasingly design their products to suit the needs of large cloud operators, leading to improved operating margins through better use of electricity, and in turn to more adoption, says Pike Research. Many of the products designed specifically to optimize cloud computing have only recently begun to reach the market.